Small Businesses Back Rep. Moore’s Legislation to Boost Tax Benefits for the Smallest Main Street Businesses

Washington, D.C. — Small Business Majority announced today its support for legislation introduced by U.S. Rep. Gwen Moore (Wisc.-04) that would bring new tax benefits to the vast majority of small businesses.

Authored by Moore, a member of the U.S. House Ways and Means Committee, with support from Small Business Majority, the Mom and Pop Tax Relief Act (H.R. 3249) would permit pass-through entities to deduct the first $25,000 in qualified business income (QBI) from their annual tax obligations. This provision is intended to replace the current Section 199A, which allows pass-through entities to deduct up to 20% of their QBI. The change would benefit small business owners with adjusted gross incomes less than $400,000 for joint filers and less than $200,000 for single filers. 

“Small businesses today are grappling with crippling uncertainty, due mainly to tariffs and the rollback of federal resources that support small firms,” said Small Business Majority Founder & CEO John Arensmeyer. “Now more than ever lawmakers must focus on offering benefits to the most vulnerable small businesses, and updating Section 199A in a way that helps the overwhelming majority of Main Street firms is one of the best ways to do that. We applaud Rep. Moore for her commitment to revising our tax code in order to deliver real results for most small businesses.”

Congress will soon decide the fate of multiple expiring provisions of the 2017 Tax Cuts and Jobs Act (TCJA), including the 20% standard deduction for pass-through income under Section 199A. Despite claims by lawmakers that the TCJA would help average Americans, 74% of the current Section 199A pass-through tax deduction benefit flows to the wealthiest 5% of businesses. While the highest earning pass-through entities claimed an average deduction of over $1 million in 2021 due to Section 199A, pass-throughs with adjusted gross incomes below $100,000 took home an average deduction of just $1,997. This new provision for Section 199A, however, would significantly increase the tax savings that Main Street firms would receive when compared with the current 20% deduction. 

"When the Tax Cuts and Jobs Act passed in 2017 during the first Trump Administration, the Main Street Alliance fought to make the U.S. Tax Code more equitable,” said Main Street Alliance Executive Director Richard Trent. “Unfortunately, policy makers at the time prioritized large corporations and the wealthy over entrepreneurs and growing businesses. Now is the time to correct course and better target tax relief to businesses who are just getting started, and trying to grow."

And American Sustainable Business Network Cofounder & President David Levine said of the Mom and Pop Tax Relief Act: “This would provide a strong incentive to entrepreneurs and help promote the success of startups. This is exactly what our economy needs to grow.” 

Research shows that small business owners want Congress and President Donald Trump to reform America’s tax code in ways that offer greater benefits to the smallest businesses rather than simply extending existing tax breaks that overwhelmingly favor the wealthiest corporations. In fact, a new opinion poll of 504 small business owners conducted in April by Dynata and Small Business Majority finds that 74% favor overhauling Section 199A to allow pass-through entities to deduct the first $25,000 of QBI each year.

“A flat $25,000 deduction would be a game-changer for small operations like mine and a big improvement over the current version of Section 199A,” said Brittney Patterson, office manager for 2 J’s & Sons in Noel, Mo., and wife of business owner Jeffrey Patterson. “That extra tax relief could help us hire, repair aging equipment or survive slower seasons without going into debt.”

The survey also finds that small businesses view our tax system as being skewed in favor of the wealthy, with more than three-quarters (76%) of small business owners reporting that the system favors large corporations over small businesses, 63% saying wealthy individuals don’t pay their fair share of taxes, two-thirds saying wealthy corporations do not pay their fair share and 68% saying that large corporations unfairly leverage their foreign presence to reduce their U.S. tax obligation.

Notably, a plurality (41%) of survey respondents identify as Republican or Republican-leaning independents, 36% identify as Democrat or Democrat-leaning independents and 21% identify as purely independent. 

Additionally, the Mom and Pop Tax Relief Act is co-sponsored by U.S. Rep. Nydia Velazquez (N.Y.-07), who serves as the Ranking Member of the House Committee on Small Business, U.S. Rep. Betty McCollum (Minn.-04), U.S. Rep. George Latimer (N.Y.-16), U.S. Rep. Judy Chu (Calif.-28) and U.S. Rep. Danny Davis (Ill.-07).